BOE: Rates, QE Unchanged On 8-1 Vote, Q2 GDP Stronger than Expected

Bank Rate unch at 0.1%, QE stock unch at combined GBP 895bn;
BOE: 8-1 majority for unchanged QE; Haldane against

BOE: Q2 GDP revised up by 1.5%

BOE sees CPI temporarily above 3%

BOE: Labour market slack higher than implied by jobless rate

The BOE voted unanimously to leave the Bank Rate and the stock of corporate bond purchases unchanged in the June meeting. They voted by a majority of 8-1 to leave the stock of gov. bond purchases unchanged, with Andy Haldane voting against it for the second time. The MPC revised up their growth projections for Q2 2021 by 1.5%, as covid restrictions eased. They now see output in June only 2.5% below the pre-crisis level (Q4 2019). The labour market slack is likely to be higher than implied by jobless rate, the BOE noted. Inflation rose by more than the MPC anticipated in the May report and the index is likely to exceed 3% for a temporary period. Global input cost pressures have been passed through to output prices, the report noted. However, the MPC expects the impact to be transitory. Following strong GDP growth and higher inflation, both measures are forecast to fall back. The BOE states that it will "focus on the medium-term prospects for inflation, including the balance between demand and supply, and medium-term inflation expectations, rather than factors that are likely to be transient."